Edited by Biswa Nath Bhattacharyay, Masahiro Kawai and Rajat M. Nag
Chapter 10: Modes of Asian financial integration: financing infrastructure
The costs of building and upgrading the Asia-Pacific region’s infrastructure to meet the basic needs of its citizens and industries and raise standards and quantity levels to those comparable to advanced countries are huge. As mentioned in Chapter 2, during 2010–2020 it is estimated that Asia will need to invest approximately US$8.22 trillion in overall national infrastructure for energy, transport, telecommunications, water and sanitation. In addition, the region will need to spend approximately US$320 billion on regional pipeline infrastructure projects (as defined in Chapter 2) in transport, energy and telecommunications. This amounts to an overall infrastructure investment need of about US$800 billion per year during this 11-year period (for details see ADB and ADBI 2009; Bhattacharyay 2010). Financially, the demand for regional infrastructure funding will often directly compete with funding for improved national infrastructure,1 which will be primarily financed by the home-country (national and local) authorities. These financial requirements are huge and the result is a very large financing gap, or the difference between total financial requirements and the likely available financing through direct public resources. However, this public financing constraint simultaneously offers considerable benefits and vast investment opportunities for the large savings and international reserves in Asia and the Pacific (hereafter referred to simply as Asia).
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